Vital Company had net income on this period's income statement in the amount of $624,240,expenses other than cost of goods sold in the amount of $381,480,and a gross profit ratio of 58%.What was the amount of net sales on the income statement?
A)$1,836,000
B)$ 1,076,276
C)$1,734,000
D)Can't be determined with the information given.
E)$1,005,720

Question

Quizplus · Accepted Answer

Using the gross profit ratio formula: 
Gross profit ratio = (Net sales - Cost of goods sold) / Net sales
58% = (Net sales - Cost of goods sold) / Net sales
0.58 = (Net sales - Cost of goods sold) / Net sales
0.58 Net sales = Net sales - Cost of goods sold
0.58 Net sales - Net sales = -Cost of goods sold
-0.42 Net sales = -Cost of goods sold
Net sales = Cost of goods sold / 0.42
Net sales = (624,240 + 381,480) / 0.42
Net sales = 1,734,000
Therefore, the answer is (C) $1,734,000.

Vital Company Had Net Income on This Period's Income Statement